A UAE lender holds a personal guarantee from an Indian promoter. The facility is governed by English law. The dispute resolution clause is asymmetric — the structure standard in cross-border financing for thirty years. Enforcement day arrives, the borrower’s UAE assets are encumbered, and what remains is a promoter in Mumbai.
The UAE end of this has been well analysed. A&O Shearman have written on the Dubai Court of Cassation’s decision in Commercial Appeal No. 735 of 2024, holding that a unilateral option to arbitrate did not amount to a binding arbitration agreement under UAE law — while noting that the clause in issue was the less common variant, and that an earlier Cassation decision had given effect to a differently structured asymmetric clause. Akin Gump have reviewed the first year of Dubai Law No. 2 of 2025, including the DIFC Courts’ enforcement jurisdiction and the circumstances in which the Conflicts of Jurisdiction Tribunal may pause DIFC proceedings.
What has had less attention is what the same wording does at the Indian end.
Two things decided years in advance
The first is which enforcement regime applies. An asymmetric clause produces two different Indian routes:
- A DIFC judgment executes under Section 44A of the Code of Civil Procedure – the UAE having been notified as a reciprocating territory in 2020, subject to the exceptions in Section 13.
- An arbitral award enforces under Part II of the Arbitration and Conciliation Act 1996, where the grounds for refusal sit in Section 48. Different tests, different vulnerabilities, and documentation drafted for one path is frequently enforced on the other.
The second is that on either route the Indian court will look behind the clause. Whether the promoter submitted to the DIFC Courts is assessed by Indian principles rather than by the DIFC’s view of its own jurisdiction. Whether the arbitration agreement was valid is assessed under the law governing that agreement. On an English-law facility seated in the DIFC or London, the governing law is not UAE law.
The Commercial Significance
The Cassation exposure attaches principally to the litigation route and to onshore UAE enforcement. Clauses drafted on the assumption that both are identical risks have not been examined closely.
Counsel in each jurisdiction can elaborate better on the legal nuances involved. The narrower point in this article is that the enforceability of the security was substantially determined when the wording was chosen without having since been revisited.
Continuing Neglect
Banking legal desks treat jurisdictional wording as operational risk, and are not wrong to. It has no cost until enforcement, at which point the cost is very large and the position is already fixed. It is not market practice to fund documentation audits across a performing book.
What does happen continuously is amendment in the form of extensions, waivers, security renewals, transfers, borrower substitutions. That documentation is under counsel’s mandate. A jurisdiction and enforceability review carried as a standing item on the amendment checklist reaches the same place over two to three years at no incremental cost.
What is in the market
| Legacy wording | Where the exposure sits | The question to put to counsel |
| Generic “courts of the UAE” | Ambiguity between onshore Dubai and the DIFC. Unlikely to satisfy the specific, clear and express opt-in standard under Dubai Law No. 2 of 2025. | Whether the clause identifies a forum with enough precision to constitute submission under the forum’s own law, and what an Indian court would make of it if it does not. |
| Unilateral or asymmetric opt-in to the DIFC Courts | Effectiveness of the opt-in, following Khoury under the predecessor legislation and the 2025 law. Feeds directly into whether submission is established for Indian purposes. | Whether the clause is an effective opt-in under current DIFC law, and whether the guarantor’s own submission stands independently of it. |
| Asymmetric arbitration option | Cassation 735/2024 onshore. On the Indian route, validity turns on the law governing the arbitration agreement, which on an English-law facility is unlikely to be UAE law. | Which law governs the arbitration agreement, and whether the option structure survives under that law rather than under UAE law. |
| Service provisions | The UAE is not a party to the 1965 Hague Service Convention and is not an HCCH member, so the Convention does not govern service between the two jurisdictions. Bilateral India-UAE judicial cooperation arrangements do. | Whether an Indian process agent or equivalent mechanism is in place, and what service route the documents actually contemplate. |
Firms applying Hague Convention reasoning to this corridor, including India’s objection to Article 10, are analysing an instrument that does not apply. And irregular service does not by itself defeat an Indian enforcement: Indian courts have generally emphasised actual notice and a fair opportunity to be heard over formal compliance, which makes a service objection a supporting argument rather than a primary one.
Cross Border Exposures
An exposure created by drafting practice in one jurisdiction, tested against a statute in a second, and finally determined in a third – with the counsel who drafted the clause advising in none of the three at the relevant time.
When timely review is not given attention and resources, the defect is found at enforcement, which is the one point at which it can no longer be corrected.
Lawfinity Solutions advises international law firms on cross-border legal market positioning. If the India corridor is a live question for your firm, we would be interested in a conversation. Lawfinity works with one firm per jurisdiction. Engagements begin with a single conversation about your firm’s current position and where the corridor question is live for you. Write to Prachi Shrivastava
